In the Paging Dr. Lean series, Patricia E. Moody asks lean experts to answer your lean questions. This forum allows industry leaders to speak to the lean issues or questions you come across each day.

It’s been a long year, and we’ve all had enough pain and suffering to last us through “The Next Healthcare Revolution.” But at 17 percent of the U.S. GDP, one third of which is administrative costs, it gets personal — real personal. Even as the principles of lean manufacturing are applied to healthcare throughput, paperwork and facility design, progress has been too slow. Dorian Shainen, Shewhart Award-winning quality pioneer at my old home base, Rath and Strong, pounded into us, “Let the data lead you,” and there is truly much good data out there. But we could use a little vision, some wisdom and some wild and crazy prognostications to comfort us.

Andy Coutu

First, good news for those of us who need organs and joints refreshed, just in time. Andy Coutu, President of R & D Technologies Inc., said that the next three to five years will see producers perfect their 3D Additive Manufacturing skills. “Right now, fewer than 5 perfect of manufacturers have 3D printers,” Coutu said. “Within the next three to five years, the industry predicts the percentage will increase to 27 percent. Companies such as Stratasys will hit the $1 billion mark, and the street predicts that 3D printing companies’ (Stratasys and 3D Systems) stock will remain on the buy list.” Good news for healthcare, where hopeful rumblings about replacement organs and joints have the market’s attention. “It will be awhile before the FDA approves these printed body parts, but right now they are jetting out human tissue through 3D printers. With stem cell, fatty tissue and DNA, who knows where this will go?”

Arthur Peabody

Arthur E. Peabody, Jr., Lead Medicare Counsel, BlueCross BlueShield Association said healthcare will lead all industry sectors with the highest percentage of security breaches. “The increase will force the federal government to focus on prevention, including more requirements for encryption of electronic health information for HIPAA,” Peabody said. “We’ll see increased licensing and security requirements from the FDA for healthcare apps and medical devices. Plus litigation will unleash a flood of monetary damages imposed by federal and state courts on providers who suffer data breaches.”

Technology’s role in healthcare will continue to grow and change how care is delivered, he said. “Telemedicine and remote devices will permit at-home patients to “see” their physicians and other health professionals,” Peabody said. “The traditional hospital model will be replaced by shopping center ‘mini clinics’ and inpatient services will be sharply reduced by greater reliance on community-based services linked by technology to hospitals with greater resources. The fee-for-service model will be replaced by a results-based model where rapid, full recovery and infrequent re-hospitalizations become the measures for compensation — with Medicare and Medicaid leading the way.

Despite a protracted, bumpy start, the Affordable Care Act will enjoy great success, he said. “As technology glitches on the website are solved and adjustments made to insurance offerings in the individual market, millions of Americans will for the first time obtain health insurance,” Peabody said. “Attention will shift from the 5 percent of Americans losing coverage to the aging baby boomer population that will receive broader coverage at reduced cost. Employer-based health insurance will be common among all businesses — regardless of size — as small businesses, including their owners, take advantage of health exchanges that offer insurance plans at the same low cost available to large corporations. Hundreds of thousands of ill citizens will be saved from bankruptcy by the Act’s abolition of catastrophic limits.”

Genetic research will produce a myriad of improved treatments for disease, including cancer, he said. “Technological advances based on genetic discoveries will replace destructive chemotherapy with other treatments,” Peabody said. “Other advances in technology will enable the increased use of ‘artificial’ organs and new devices to replace defects in the human body — artificial eyes, ears and ‘genuine’ speech will be as commonplace as artificial limbs. Stem cell research will end heart disease and many neurological disorders.”

Jay Fulkerson

Jay Fulkerson, CEO of Milwaukee-based Health Payment Systems, is a problem-solver, but the challenges he sees ahead for healthcare are bigger than single-point solutions, starting with the clock ticking as millions of baby boomers and their physicians enter retirement.

Fulkerson sees a second big shift ahead — "populations of patients managed by teams of primary care providers who will help patients get to the right specialists and hospitals based on quality outcomes and costs. “I call it ‘the Brave New World,’” he said, “where teams of family doctors, internists and pediatric specialists, along with nurse practitioners, physician assistants, pharmacists and wellness coordinators compete for patients based on outcomes and compensation, including capitation (a per patient fee for a defined set of clinical services).”

Specialists and hospitals will vie for these teams because patient business grows with quality results and bundled payments at the episode of care level. “Patients will be referred to specialty physician services and hospital services by their medical team,” Fulkerson said. “The teams will compete for patients based on outcomes, quality and price. For example, a patient needing a knee replacement would be sent by his team to an orthopedic center chosen for its bundled prices. Data on volume of services, outcomes and quality will be available to the team or pushed to the team by the competing knee replacement providers. This method has been used by HMOs for years. Primary care providers are paid a per patient per month fee to provide all office-based services, including diagnostic testing and sometimes outpatient hospital services for total patient care.

“But if the future I see happens without third party payment, it will be even more important to get patients' information through a medical home. Right now we have significant differences in volumes of procedures and costs per procedure throughout the U.S., often with little clinical reasoning, just prevailing costs based on history. This will change — patients have to be healthier, but when they do need specialty care or hospitalization, they should get to the best place possible, the one that is most efficient with the best outcomes.”

By 2020, third-party payment for healthcare will be eliminated, replaced by a competitive model in which patients have choices of multiple providers of care, with quality and frequency (the number of procedures a particular provider or hospital performs) key decision factors, he said. “Research shows frequency is a quality measure, i.e. a hospital that performs 50-75 heart bypass surgeries may not get the same results as one doing 1,000 or more — same for heart surgery and joint replacements.

“Total out-of-pocket costs will be capped at a percentage-of-income basis supported by state reinsurance pools to be funded by a small increase in sales tax, payments by providers who fail to meet quality standards and by payers of individual healthcare claims.”

Patricia Moody

Named by Fortune magazine a "Pioneering Woman in Manufacturing," Patricia E. Moody, The Mill Girl at Blue Heron Journal, tricia@patriciaemoody.com, is a business visionary, author of 14 business books and hundreds of features. A manufacturing and supply management consultant for more than 30 years, her client list includes Fortune 100 companies as well as start-ups. She is the publisher of Blue Heron Journal, where she created the Made In The Americas (sm), the Education for Innovation (sm) and the Paging Dr. Lean (sm) series. Her next book about the future of manufacturing is The Fourth Industrial Revolution. Copyright Patricia E. Moody 2013. With permission.

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